Culture and Strategy Are Two Sides of the Same Coin
If there is one positive consequence of the pandemic, it is how companies have become more thoughtful about their culture.
In the dark days of 2020, business owners and CEOs sought the right balance between empathy and expectation for performance, leading them to redefine their values and culture. And of course, a tight job market encouraged companies to be more explicit about their culture because candidates now seek greater purpose.
The question is - how do you define (or redefine) company culture? Can it just be about posting a new set of value statements by the water cooler? Probably not, HBR stated in March 2022, “Despite its sudden elevation in corporate life, purpose remains a confusing topic."
Here is how to solve the confusion.
On paper, culture is simple
Defining culture is simple enough: The Predictive Index defines “Organizational culture (as) your business core values, rewarded behaviors, and ultimately, performance drivers.”
Any company can define a set of aspirational values; after all, who does not want to be “innovative,” “competitive,” or “customer-minded”? But which one matters the most?
However, the key is not to determine great values and behaviors; it is to determine the right ones, those which will translate your business goals into the daily actions of your employees, those that will inch you closer to your goal. They must eliminate any confusion among employees as to what they are supposed to be doing.
Your strategy feeds your culture
The only way to define the right culture for any organization is to start with strategy.
That may sound like a tall order when less than 50% of small and medium-sized businesses in 2022 have an explicit strategy, according to The Predictive Index.
The good news is that many SMB owners and CEOs may not have their strategy documented as thoroughly as a Fortune 500 would, but they have their goals and how to attain them clearly spelled out in their minds; the trick is to write them down and to share them with employees.
It can be as simple as documenting which broad type of strategy they are pursuing: are they competing based on innovation? Based on operational effectiveness and low costs? Based on customer intimacy?
We often run strategy sessions with our clients. They are always exciting because they result in clarity and simplicity of purpose that has often evaded leaders before. But the trick is for employees, not just leaders, to experience that clarity and simplicity and fully understand the strategy.
Do your employees understand your strategy?
Many leaders, including in large organizations, believe that the job is done when the strategy or the strategic plan has been defined. Quite the opposite: the job starts when the goals are set.
What matters the most is not that the strategy exists (this is a prerequisite), but that it is understood by employees. When it is, associates behave in ways that will get you closer to your goals, and they will all behave the same way, “rowing in the same direction.”
A clear strategy reduces and eliminates the execution tax that otherwise stems from conflicting goals and behaviors: for example, the Product team may try to create innovative products, but the Procurement team may still focus on purchasing lowest-cost components. When a company experiences these conflicting goals, it undermines the new product quality which results in delayed rollout, lost sales, and internal strife.
You don’t know what you don’t know until you know it
You need data to assess if employees understand the strategy. Randomly asking employees over lunch break does not do it.
In our firm, we use Line-of-SightSM, a strategy execution platform that, like an X-ray, cuts through appearances and establishes whether employees understand the company’s intent, and how confident they are that they really get it.
With that kind of data, the leadership can then determine whether more efforts are required to share and explain the strategy and perhaps address skepticism or simply misunderstanding. Remember, your strategy is effective only when employees start to behave in ways that get you closer to the company’s objectives.
Where to start
Don’t take our word for it: in an article published in early 2022, HBR bluntly states that “a business’ culture can catalyze or undermine success”.
We hope you are now seeing how culture and strategy really are the same thing. A strong culture unites people around simple goals and helps everyone get the job done, which means meeting your strategic business and revenue goals.
If you want to be deliberate about your culture and align it tightly with your business goals, give us a call. We can discuss how other companies have done it, and how you can do it too.